Servicing Guide

Published November 10, 2020

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What is the occupant eligibility criteria for a Mortgage Release transition option?

The following table provides the occupant eligibility criteria for a Mortgage Release transition option. 

Occupant Eligibility
 

Income is sufficient to cover rental payments of not more than 31% of the borrower/tenant’s monthly gross income.

Note: If the current market rent, which will be set by Fannie Mae’s property management company, is greater than 31% of the borrower/ tenant's monthly gross income, a lease agreement will not be offered. For the Mortgage Release three-month transition option with no rent payment required, this income requirement is not applicable.

 

The occupant agrees to

  • be responsible for regular maintenance,

  • keep the property in good condition, and

  • permit marketing of the property for sale.

    Note: For the Mortgage Release three-month transition option with no rent payment required, the borrower must agree to allow the property to be marketed for sale beginning on the 30th day of the use and occupancy agreement.

 

The number of occupants is appropriate for the home and in compliance with local laws and HOA rules, if applicable.

 

If pets are present, renter's insurance is obtained, if required.

 

The occupants signing the lease agreement must agree to a credit review, and all residents over 18 years of age must have an acceptable background check, including receiving clearance from OFAC.

 

There are no signs or reports of illegal activities conducted at the property.

 

The property is to be used as a principal residence.

For more information please see F-1-14, Processing a Fannie Mae Mortgage Release (Deed-In-Lieu of Foreclosure)

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